SARS’ Lie-detector Test

In the old South Africa, the favourite national pastimes were braaivleis, rugby, and cheating on your tax returns.This was made easier by the fact that the Receiver of Revenue of old operated in an environment where no two office seven talked to one another, systems were archaic, and brain power was generally regarded as being at a premium.

Not any more.Many column-centimetres of news print have been devoted to the vastly-improved SARS, and these improvements extend to ever-more ingenious ways in which SARS auditors go after those who do not contribute their fair share to Treasury’s coffers.If you still think that you can getaway with cheating on your taxes,here are some of the ways that SARS can catch you.

Unexplained growth in your asset base

Directors of companies, members of close corporations, and taxpayers who conduct business for their own account, are required to complete a Statement of Assets and Liabilities as part of their annual tax returns.This statement should include all assets at cost and all liabilities at face value.

SARS uses this statement to determine whether or not you have declared all of your income.How so? If, for example, you have declared a net asset position of R1 million in 2009, and R1.5million in 2010, SARS will become somewhat suspicious if you have only declared income amounting toR300 000. The logic is obvious—how did you manage to increase your asset base by R500 000 on an income of only R300 000, and at the same time, meet your normal living costs?

Your lavish lifestyle

Have you ever driven around a parking lot in an up market shopping centre and wondered who the lucky driver of that Porsche or Rolls-Royce is? Well, guess what—that chap struggling to heave his baby’s pram into the boot of that innocuous-looking VW Polo is just as curious, and when he returns to his office on Monday morning,he can satisfy his curiosity by checking out the registration number on the SARS computer systems.

What’s more, he also has the ability to find out what kind of income the owner of that brand new Range Rover is pulling in order to support that beast’s thirst for 93-octane unleaded, and he also knows what sort of monthly payments go with such a car.If the income declared falls somewhat short, he starts to ask some nasty questions.

The same goes for that fancy pad at Zimbali Lodge—a simple

Deeds Office search will tell our intrepid SARS auditor exactly how much you paid for your view of the 17th fairway, and if you have a bond against the property, he also has a good idea of what sort of salary the bank would require to grant such a loan.

The road most travelled

If the tax returns of many people are to be believed, there must be a large number of luxury vehicles out there with odometer readings in excess of 300 000 kilometres.Inflating odometer readings is the oldest trick in the book when it comes to inflating travel allowance claims.SARS now uses a highly sophisticated device in order to clamp down on such abuse—the telephone. This device enables the auditor to contact you to request that you make your vehicle available for inspection.They are nice chaps, too—they are quite happy to come to your home or place of work, so as not to inconvenience you too badly.

And if you think that this will never happen to you, then think again.Five years ago when I was still working for a corporate, I had two colleagues receive such telephone calls from SARS, and if I thought that going into the ministry would allow me to escape the"wrath to come” from SARS, one minister colleague was audited in 2007 while another got a "please explain” letter just last year.The requirement to keep logbooks as from 1 March 2010 has made SARS’ job even easier in this regard.And don’t think you can inflate the distances travelled—the SARS boys and girls also have Garmins!

Burnt bridges

I was recently at a function with a friend of mine who is a SARS auditor (yes, SARS auditors do have friends!), and I posed the following question to him: What is the easiest way to catch a tax evader? His answer would send chills down the spine of anyone who has ever ended a relationship or fired someone, since it seems that most of SARS’ tip-offs come from ex-wives, ex-girlfriends, andex-employees.

In fact, with SARS now installing anonymous tip-off lines,even current employees who have had one too many tongue lashing s from their boss can whisper enough words into SARS’ ear to give the boss, as well as his business, a lot of quality time with a SARS auditor, followed by a large tax bill issued thereafter.The moral of the story? If you are fiddling your taxes, don’t upset anyone!

Scams and Phishing Attacks From e-mails Purporting to be From SARS

There has been a steady increase in e-mail scams and phishing attacks in which the SARS brand is being abused.Members of the public are randomly emailed with false "spoofed” e-mails made to look as if these e-mails were sent from SARS, but are in fact fraudulent e-mails aimed at enticing unsuspecting taxpayers to part with personal information such as bank account details.

Examples include e-mails to appear to be from returns@sars.co.za, or refunds@sars.co.za, indicating that taxpayers are eligible to receive tax refunds.These e-mails contain links to false forms and false websites made to look like the "real thing”, but with the objective to fool people into entering personal information such as bank account details which the criminals then extract and use fraudulently. If you receive such an e-mail, please delete it immediately and do not click on the link in the email.SARS taxpayers should also take note of the following:•Do not open or respond to e-mails from unknown sources.•Beware of e-mails that ask for personal, tax, banking and e-Filing details (login credentials, passwords, PINs, credit / debit card information, etc). as SARS will never ask taxpayers for such information in an e-mail.•SARS will not request your banking details through websites.•Beware of false SMS’s.To report or to get more information on phishing, please send an email to phishing@sars.gov.za or call the SARS Fraud and Anti-Corruption Hotline on 0800 00 2870. Information and warning obtained from the SARS website (www.sars.gov.za)

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.